Faced with a dwindling reservoir and no prospect of rain, South Coast water managers have pledged to
take a drastic 55 percent cut in their allocations from Lake Cachuma, beginning Oct. 1.

Not since 1990 have local water agencies agreed to across-the-board cutbacks in a severe drought. It is
the largest proposed reduction in the history of the reservoir, the main water source for the South Coast.
After more than two years of little rain, the lake has shrunk to 36 percent of capacity, and water managers
want to ensure that some reservoir supply will be available through 2015 and even into the winter of 2016,
if the dry weather drags on.

"We really had to buckle down and take a lot less water," says Tom Fayram, deputy county public works
director. Fayram called a meeting with the water managers of Carpinteria, Goleta, Montecito and Santa
Barbara earlier this month.

"If we do get a big rain year," he said, "then we can change the allocations midstream."

The proposed cutbacks are awaiting approval by the U.S. Bureau of Reclamation, which owns the dam at
Lake Cachuma on the Santa Ynez River. But they will not likely translate into 55 percent cutbacks for
residents, water managers say, because the South Coast can pump more ground water, draw on state
aqueduct water that is banked in other reservoirs, and purchase new supplies.

At the same time, the reductions may affect future development in the City of Goleta, UCSB and Isla Vista.
Under a ballot measure approved by Goleta Water District customers in 1991, the district is banned from
providing new or additional water service "to any property not previously served by the District" unless it is
receiving "100 percent of its deliveries normally allowed from the Cachuma Project." City records show that
about 1,500 new residential units and 1.4 million square feet of commercial space are in construction or
under review in the city alone.

Even as the South Coast prepares to take less Cachuma water, ratepayers will pay more to get the water
delivered. For the first time since the drought of 1990, water managers say, it will be necessary to pump
reservoir water up into the intake tower that normally channels water by gravity flow through the Tecolote
Tunnel to the South Coast. The water level is expected to drop below the intake gate in mid-September.

As an emergency measure, the Cachuma Operations and Maintenance Board, comprised chiefly of South
Coast water board directors, is preparing to install pumps on a barge and float a pipeline for more than
half a mile along the surface of the lake to the intake gate. Including the high cost of electricity to run the
pumps, the board estimates that the project will cost nearly $6 million to build and operate through
February, and $8 million if the pumping continues through March 2016.

The City of Santa Barbara will draw from reserves to pay its share of the first six months of pumping, or
$2.1 million. Carpinteria, Goleta and Montecito are proposing to borrow money through the Cachuma
operations board to cover their share. Carpinteria will owe $715,000, Goleta will owe $2.4 million, and
Montecito will owe $674,000.

No one is disputing the need for the emergency pumping project, which is scheduled to go online in
September. It was ratified last week by the Carpinteria Valley Water District and Goleta Water District
boards. The City of Santa Barbara and the Montecito Water District, serving both Montecito and
Summerland, are expected to approve it on Tuesday.

"It's a lifeline for the South Coast," says Karl Meier, a Montecito Water District engineer. "I don't know
where else you're going to get water from."

But the size and cost of the project are raising some eyebrows - and some water bills. In two communities -
Santa Barbara and Carpinteria - the project has been factored into proposed water rate increases of as
much as 100 percent and 10 percent, respectively, for residential customers.

The 1990 project was mostly designed in-house, says Bob Wignot, who performed the work himself as an
engineer and then-general manager of the Cachuma operations board. The entire project cost South Coast
water customers $769,000 over five-and-a-half months of operations, ending with the "March Miracle"
deluge in 1991.